Three months after becoming partially self-insured, Villa Rica has banked savings of nearly $112,000 in an experiment that has caught the eye of other Georgia cities eager to beat their annual cycle of premium increases.
And city officials hope that new tweaks to the system will not only create a healthier city workforce, but do so cheaper -- and give the city a strategic advantage in luring new staff.
The largest savings has come from prescription drugs, where employees have been able to switch to generic medications, or use rebate programs that slash the cost of the most expensive drugs.
"I'm pretty pumped about this," said City Manager Tom Barber, who gave a status update on the program at the Jan. 9 City Council meeting. "It's some pretty cool stuff."
According to data presented at the meeting, the city's cost for administration and claims
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paid through its self-funded insurance program totaled $220,000 during the last quarter of 2017, or the months of October through December.
Compared to the same period in 2016, when the city's health policy was directed by United Healthcare, the city paid $332,000 in premiums -- meaning the city saved $112,000 by making the change to self-funding.
In August, the city cut itself loose from the sort of giant insurance companies that provide healthcare coverage for most Georgia cities, and instead chartered a course of independently managing its workforce insurance through a network of several types of insurance providers.
This includes a provider of "stop-gap" coverage that would kick in should a city employee or dependent experience a catastrophic injury or illness, thus limiting the financial impact of a large claim against the city's health care plan.
Last July, council members learned that United Healthcare was requesting a $200,000 increase in their premium for 2018, even though city workers had filed fewer claims than in the previous year.
The city's experience last summer was typical of other cities in the state, who annually face demands from their insurance carriers for large premium increases. The net result is that those cities are continually shopping around for new, cheaper, insurance companies, and city employees are continually dealing with changes in their insurance policies.
Until recently, self-insured group health plans were only available for large employers, not smaller groups, such as Villa Rica's staff, which numbers less than 120.
Word of the city's venture into partially self-insured service has spread through the grapevine of the Georgia Municipal Association, the body through which all city governments in the state communicate.
Mayor Jeff Reese told those attending the Jan. 9 council meeting that five other mayors in the state, including the one serving the coastal town of Darien, had contacted him asking for details of what Villa Rica had done.
"For the first time, (this) that means the city is saving because, in the past, we had wellness programs, but any savings that were generated went to the insurance company," Reese said. "Now, it behooves us to have a well and fit workforce, because that money stays here in the city. This is ground-breaking stuff."
With the old policy, the city never received any benefit if it cut claims due to workforce programs meant to improve employee health. Instead, the large insurance company would collect its premium from the city and pocket whatever it might save in claims.
In the self-funded system, whatever had been deducted from employee pay in the past is instead deposited into a city-managed bank account, and claims are paid from that fund.
City Manager Barber cautioned that the large savings the city is now seeing may not continue as the new system stabilizes over time. But he said that the city would still benefit if the monthly savings averaged some $10,000 per month.
"Not only is that $10,000 we're saving, but the premium didn't go up 8-12 percent per year, and we wouldn't have any information to help us save anything like we're doing now."
Previous wellness programs, city officials said, provided no real information to employees to improve their health care, nor provided any information to the city on where its claims risks were.
During the meeting, the city also approved a plan to change its wellness program, opting for one that would work more closely with employees to identify and change health risks. City officials hope the overall effect will be a healthier workforce, with each employee paying less for their healthcare because the city is saving money.
At the council's Jan. 4 work session, Barber said that he hopes this will help the city lure experienced staff away from other towns with whom Villa Rica competes for workforce recruits, giving the city a "significant strategic advantage."
"We'll be able to offer health care at a lower cost per employee than anybody," he said. "This could make us an absolute magnet for healthy, non-tobacco using employee candidates."